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Broomfield's Quintess files for Chapter 11

Luxury time share company owes more than $123 million

By Shay Castle

Staff Writer

Posted:
10/14/2016 03:42:50 PM MDT

Updated:
10/14/2016 05:18:09 PM MDT

This Quintess vacation home, shown in a 2006 file photo, was located in Aspen on Red Mountain. It's not clear whether Quintess, which filed for Chapter 11 bankruptcy Oct. 7, still owns or leases the property. (Courtesy photo/)

A Broomfield-based luxury timeshare company has filed for bankruptcy, claiming more than $123 million in debts to hundreds of creditors.

Quintess LLC, which rents out multi-million dollar homes to its members, filed for Chapter 11 bankruptcy Oct. 7, in a story first reported by Denver online publication Business Den. The move will allow the company to restructure rather than liquidate its assets.

Court documents reveal the company owes at least $123.7 million including more than $121 million in refundable deposits to parties who purchased time share memberships through the company.

"With approximately $121 million of debt associated with membership deposit refunds alone, the debtor is burdened with massive liabilities," the company said in court documents filed Wednesday. "The debtor has determined that it cannot raise additional funding without shedding these massive liabilities."

Quintess alleges it will need to raise $6 million to $10 million to stay solvent during bankruptcy proceedings.

A $3 million loan has been pledged from parent company Club Holdings (CH), with Quintess board members — including CH/Quintess CEO Pete Estler and Carl Berg — lending an additional $6 million.

Officials from Quintess did not respond to a request for comment.

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The top 20 creditors are owed more than $13 million, with individual claims ranging from $400,000 to more than $1 million. The creditors were not identified except by their Quintess member numbers.

Quintess was founded in 2004 in Boulder by Len Allsup, who brought on Estler and his partner, Ben Addoms, along with other executives.

Quintess in 2005 had 65 members and 10 homes, charging membership fees between $165,000 and $300,000, and $10,500 to $20,000 in annual dues. The company merged with Colorado-based Dream Catcher Resorts in 2006. The $62 million deal resulted in a portfolio of 38 homes worth a collective $100 million.

The Great Recession led Quintess to make several changes to its business models, including leasing properties instead of buying them and ending refundable deposits.

Quintess was forced to sell its real estate portfolio at the end of 2012 for less than the company paid for the properties, according to court documents.

The money was used to pay off $150 million in debt, but "the proceeds were not sufficient to pay deposit refunds or equity holders."

The number of new memberships slowed considerably, despite continual discounting of prices, and added to Quintess' financial distress.

In 2012, the price of membership was $250,000 for a three- to four-week vacation package. By 2014, that had dropped by half, to $125,000, and it continued to decline to $53,000 in 2015.

The company's website lists 47 Quintess locations. Memberships are still being sold, according to a representative who answered the phone Friday.

More than 88 percent of the 542 creditors approved a restructuring plan that will turn creditors into shareholders, eliminating more than $100 million in refund debt. Members will then own 42 percent of the company.

At least one member suit is active against the company, with four others having been already arbitrated. But Quintess alleges it does not have sufficient cash on hand for legal fees that would be associated with more suits.

A balance sheet included in Wednesday's filing shows assets of $11.9 million and liabilities of $168 million.

The restructuring plan is still subject to court approval. A meeting of creditors and status conference is set for Nov. 16 in Denver.

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